Solution Manual for Managerial Accounting PDF

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Chapter 1 solution manual for pearson book on intro to managerial accounting. Short answers, Exercises and problems all included....

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Solution Manual for Managerial Accounting 3rd Canadian Edition by Braun Complete downloadable file at:

https://testbanku.eu/Solution-Manual-forManagerial-Accounting-3rd-CanadianEdition-by-Braun Quick Check Answers: 1. b 2. b

3. d 4. d

5. c 6. c

7. c 8. a

9. b

Managerial Accounting Third Canadian Edition Instructor’s Solutions Manual Copyright © 2018 Pearson Canada Inc.

1

Short Exercises (5–10 min.) S1-1 The four primary responsibilities of managers include planning, directing, controlling, and decision making. Managers plan by setting goals and objectives for the company and devising strategies for achieving those goals. Then they direct the day-today operations of the company in light of the goals and objectives. They control the company by comparing actual results to plans and then use that feedback to adjust plans and operations. Throughout all aspects of these duties, management is making critical business decisions.

Student responses may vary.

2

Managerial Accounting Third Canadian Edition Instructor’s Solutions Manual Copyright © 2018 Pearson Canada Inc.

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(5–10 min.) a.

S1-2

Managerial accounting

b. Managerial accounting c.

Financial accounting

d. Financial accounting e.

Managerial accounting

f.

Managerial accounting

g. Financial accounting h. Managerial accounting i.

Financial accounting

j.

Financial accounting

k.

Financial accounting

l.

Financial accounting

m. Managerial accounting

Managerial Accounting Third Canadian Edition Instructor’s Solutions Manual Copyright © 2018 Pearson Canada Inc.

3

(5–10 min.) S1-3 a.

Internal auditing department

b. Controller c.

Treasurer

d. Internal auditing department e.

Controller

f.

Controller

g. Treasurer h. Internal auditing department i.

Controller

j.

Controller

k.

Treasurer

l.

Internal auditing department

m. Controller

4

Managerial Accounting Third Canadian Edition Instructor’s Solutions Manual Copyright © 2018 Pearson Canada Inc.

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(5–10 min.) S1-4 Characteristic

Check () if related to internal auditing 

a.

Helps to ensure that company’s internal controls are functioning properly

b.

Reports to treasurer or controller

c.

Required by the Toronto Stock Exchange if company stock is publicly traded on the TSX



d.

Reports directly to the audit committee



e.

Ensures that the company achieves its profit goals

f.

Is part of the accounting department

g.

Usually reports to a senior executive (CFO or CEO) for administrative matters

h.

Performs the same function as independent certified public accountants

i.

External audits can be performed by the internal auditing department



Managerial Accounting Third Canadian Edition Instructor’s Solutions Manual Copyright © 2018 Pearson Canada Inc.

5

(10 min.)

S1-5

Each of the five ethical standards contributes to maintaining the CPA Canada’s expectation that management accountants will uphold the highest standards of ethical behaviour. Without the necessary competence, management accountants will be unable to perform their responsibilities. Even if they do recognize an ethical dilemma, they could lack the competence required to determine all the alternative courses of action and the implications of each alternative. Having independence is important for minimizing or eliminating the impact of others’ influences. Management accountants need to provide opinions based on their own interpretation of data rather than the interpretations of other stakeholders. Management accountants have access to confidential information. If they do not maintain that confidentiality, their companies could suffer. Their companies would be reluctant to provide access to information, which would prevent management accountants from performing their responsibilities. Additionally, Employers must have confidence that management accountants have the integrity to apply their skills appropriately and avoid being prejudiced by any conflicts of interest. Management Accountants should have the ability as well, to effectively analyze situations so that they might communicate them faithfully to employers, regulators or clients to ensure proper action is taken.

6

Managerial Accounting Third Canadian Edition Instructor’s Solutions Manual Copyright © 2018 Pearson Canada Inc.

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(continued)

S1-5

Finally, An important part of management accountants’ responsibilities is communicating information and providing reports to senior management. To be able to rely on these reports, management must have confidence that the management accountant is not hiding inconvenient facts or presenting a biased view. Student responses may vary.

Managerial Accounting Third Canadian Edition Instructor’s Solutions Manual Copyright © 2018 Pearson Canada Inc.

7

(5 min.) a.

S1-6

Providing earnings information to your brother before it is publicly announced violates the concept of client confidentiality, and fails to uphold trust.

b. Stealing from your employer is a violation of the concept of integrity, and is illegal c.

Skipping continuing education sessions could violate the requirement to maintain professional competence in enabling competencies. If your company paid for you to attend the conference, skipping the sessions also violates the notion of integrity

d. Failing to read the specifications of the software package before purchasing it violates professional competence in enabling competencies e.

8

Failing to provide job description information to management because you fear it may be used to cut a position in your department violates the notion of integrity and the required skills of a competent accountant

Managerial Accounting Third Canadian Edition Instructor’s Solutions Manual Copyright © 2018 Pearson Canada Inc.

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a.

(5 min.)

S1-7

(5 min.)

S1-8

ISO 9001:2008

b. Enterprise resource planning (ERP) system c.

The Sarbanes-Oxley Act (SOX)

d. XBRL e.

a.

Ecommerce

Prevention costs

b. Lean production c.

Appraisal costs

d. Internal failure costs e.

External failure costs

Managerial Accounting Third Canadian Edition Instructor’s Solutions Manual Copyright © 2018 Pearson Canada Inc.

9

(5–10 min.) a.

S1-9

Lean

b. Traditional c.

Traditional

d. Lean e.

Traditional

f.

Lean

g. Lean h. Traditional i.

Lean

j.

Lean

k.

Lean

l.

Lean

m. Traditional

10

Managerial Accounting Third Canadian Edition Instructor’s Solutions Manual Copyright © 2018 Pearson Canada Inc.

Full file at https://testbanku.eu/

(5 min.)

S 1-10

1.

Reworking defective units—internal failure

2.

Litigation costs from product liability claims—external failure

3.

Inspecting incoming raw materials—appraisal

4.

Training employees—prevention

5.

Warranty repairs—external failure

6.

Redesigning the production process—prevention

7.

Lost productivity due to machine breakdown—internal failure

8.

Inspecting products that are production process—appraisal

9.

Incremental cost of using a higher grade raw material— prevention

halfway

through

the

10. Cost incurred producing and disposing of defective units— internal failure

Managerial Accounting Third Canadian Edition Instructor’s Solutions Manual Copyright © 2018 Pearson Canada Inc.

11

(10–15 min.)

S1-11

Req. 1 Prevention costs: Negotiating with and training suppliers to obtain higher quality materials and on-time delivery Redesigning the manufacture

speakers

to

make

them

easier

to

Appraisal costs: Additional 20 minutes of testing for each speaker Avoid inspection of raw materials. Internal failure costs: Rework avoided because of fewer defective units Avoid lost profits from lost production time due to rework. External failure costs: Reduced warranty repair costs Avoid lost profits from lost sales due to disappointed customers.

12

Managerial Accounting Third Canadian Edition Instructor’s Solutions Manual Copyright © 2018 Pearson Canada Inc.

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(continued)

S1-11

Req. 2 Cost / Analysis Prevention costs: Negotiating with and training suppliers to obtain higher quality materials and on-time delivery…………. Redesigning the speakers to make them easier to manufacture……………………………………… Appraisal costs: Additional 20 minutes of testing for each speaker………. Savings on Inspection of raw materials………………………. Internal failure costs: Savings on Rework………………………………………………... Savings on Lost profits from lost production time due to rework……………………………………………………………. External failure costs: Savings on Warranty repair costs……………………………… Savings on Lost profits from lost sales due to disappointed customers…………………………………........

Costs

$ 300,000 1,400,000 500,000 $



Net from implementing quality program………….

$0

Wharfedale should implement the new quality program. The company would save $0 by implementing the new program but the change would likely improve longer term relations with current as well as potential new customers.

Managerial Accounting Third Canadian Edition Instructor’s Solutions Manual Copyright © 2018 Pearson Canada Inc.

13

(5–10 min.) 1.

External failure cost

2.

External failure cost

3.

External failure cost

4.

Appraisal cost

5.

Prevention cost

6.

Internal failure cost

14

S1-12

Managerial Accounting Third Canadian Edition Instructor’s Solutions Manual Copyright © 2018 Pearson Canada Inc.

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Exercises (Group A) (5–10 min.) a.

E1-13A

Controlling

b. Decision making (also directing) c.

Planning (also decision making)

d. Decision making (also directing) e.

Decision making (also controlling)

Student responses may vary since several of management’s responsibilities overlap when performing these activities.

Managerial Accounting Third Canadian Edition Instructor’s Solutions Manual Copyright © 2018 Pearson Canada Inc.

15

(5 min.) a.

E1-14A

Companies must follow IFRS or ASPE in their financial accounting systems.

b. Financial accounting develops reports for external parties such as creditors and shareholders. c.

When managers evaluate the company’s performance compared to the plan, they are performing the controlling responsibility of management.

d. Managers are decision makers inside a company. e.

Financial accounting provides information on a company’s past performance to external parties.

f.

Managerial accounting systems are not restricted by IFRS or ASPE but are chosen by comparing the costs versus the benefits of the system.

g. Choosing goals and the means to achieve them is the planning function of management. h. Managerial accounting systems report segments or business units of the company. i.

16

on

various

Financial accounting statements of public companies are audited annually by public accountants.

Managerial Accounting Third Canadian Edition Instructor’s Solutions Manual Copyright © 2018 Pearson Canada Inc.

Full file at https://testbanku.eu/

(5–10 min.) 1.

Financial accounting information

2.

Financial accounting information

3.

Managerial accounting information

4.

Financial accounting information

5.

Managerial accounting information

6.

Financial accounting information

7.

Financial accounting information

8.

Financial accounting information

9.

Financial accounting information

E1-15A

10. Both 11. Both 12. Financial accounting information 13. Financial accounting information 14. Both

Managerial Accounting Third Canadian Edition Instructor’s Solutions Manual Copyright © 2018 Pearson Canada Inc.

17

(5–10 min.) E1-16A a.

The CFO and the COO report to the CEO.

b.

The internal audit function reports to the CFO or CEO and the audit committee.

c.

The controller is directly responsible for financial accounting, managerial accounting, and tax reporting.

d.

The CEO is hired by the board of directors.

e.

The treasurer is directly responsible for raising capital and investing funds.

f.

The COO is directly responsible for the company’s operations.

g.

Management accountants often work with crossfunctional teams.

h.

A subcommittee of the board of directors is called the audit committee.

18

Managerial Accounting Third Canadian Edition Instructor’s Solutions Manual Copyright © 2018 Pearson Canada Inc.

Full file at https://testbanku.eu/

(5 min.) E1-17A Major issues in management accounting include: 1. 2.

3.

The role played in providing information; The behavioural implications of managerial accounting information (e.g., how does this impact performance reward systems in organizations?); The management of organizational capacity;

4.

The development, deployment and use of accounting and management information systems.

5.

The stewardship of sustainable activities in the organization

(Student answers may vary.)

Managerial Accounting Third Canadian Edition Instructor’s Solutions Manual Copyright © 2018 Pearson Canada Inc.

19

(15 min.) E1-18A Req. 1 While the amount is not large now, the repeated nature of the thefts means that they add up over time. Also, the repeated nature of the thefts increases the severity of Anik Cousineau’s unethical behaviour. A new employee who has engaged in repeated thefts is unlikely to become a valued and trusted employee. As controller, Mary Gonzales hired Anik, and she is also responsible for the lack of controls that permitted a new employee to commit this theft. However, this is no excuse for Anik’s unethical behaviour. The controller should think carefully whether it is in the company’s interest to keep Anik or fire her immediately. This incident also reflects poorly on Mary’s competence. She needs to learn from the experience and supervise the next bookkeeper more carefully. Req. 2 The new information makes Mary’s decision more complex. Being new, she may want to discuss the situation with the company president. Even if the bookkeeper believed she was just “borrowing” the money, her behaviour is still unethical. It will probably be difficult to confirm whether Anik did in fact repay money she had taken in the past. Unless Mary can obtain additional clarifying information, one alternative to firing her would be to indicate to Anik that this behaviour will not be tolerated in the future and to establish better controls and closer supervision. Student responses may vary.

20

Managerial Accounting Third Canadian Edition Instructor’s Solutions Manual Copyright © 2018 Pearson Canada Inc.

16

Managerial Accounting Third Canadian Edition Instructor’s Solutions Manual Copyright © 2018 Pearson Canada Inc.

Full file at https://testbanku.eu/

(5–10 min.) 1.

Financial accounting information

2.

Financial accounting information

3.

Managerial accounting information

4.

Financial accounting information

5.

Managerial accounting information

6.

Financial accounting information

7.

Financial accounting information

8.

Financial accounting information

9.

Financial accounting information

E1-15A

9.

Financial accounting information

10. Both 11. Both 12. Financial accounting information 13. Financial accounting information 14. Both

Managerial Accounting Third Canadian Edition Instructor’s Solutions Manual Copyright © 2018 Pearson Canada Inc.

17

(5–10 min.) E1-16A a.

The CFO and the COO report to the CEO.

b.

The internal audit function reports to the CFO or CEO and the audit committee.

c.

The controller is directly responsible for financial accounting, managerial accounting, and tax reporting.

d.

The CEO is hired by the board of directors.

e.

The treasurer is directly responsible for raising capital and investing funds.

f.

The COO is directly responsible for the company’s operations.

g.

Management accountants often work with crossfunctional teams.

h.

A subcommittee of the board of directors is called the audit committee.

18

Managerial Accounting Third Canadian Edition Instructor’s Solutions Manual Copyright © 2018 Pearson Canada Inc.

Full file at https://testbanku.eu/

(5 min.) E1-17A Major issues in management accounting include: 1. 2.

3.

The role played in providing information; The behavioural implications of managerial accounting information (e.g., how does this impact performance reward systems in organizations?); The management of organizational capacity;

4.

The development, deployment and use of accounting and management information systems.

5.

The stewardship of sustainabl...